Pitney Bowes Seeks Portrait Shares (revised) - Analyst Blog

Bowes MapInfo UK Limited, a wholly owned subsidiary of

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), announced its offer to acquire the outstanding shares of Portrait Software plc, a company which provides software to enhance existing customer relationship management systems, enabling clients to achieve improved customer retention and profitability.

Portrait Software offers a suite of software applications that help companies increase their level of involvement with their customers. These applications help companies design and execute effective customer service and marketing campaigns based on superior insight into customer behavior.

Pitney Bowes is a leading supplier of products and services in the large majority of its business segments. Its meter base and continued ability to place and finance meters in key markets is a significant contributor to its current and future revenue and profitability. However, all segments face competition from a number of companies. We believe that its long experience and reputation for product quality as well as its sales and support service organizations are important factors in influencing customer choices with respect to its products and services.

Its significant investment in research and development operations differentiates it from competitors. It has many research and development programs that are directed toward developing new products and service offerings. As a result of these efforts, it has been awarded a number of patents with respect to several of its existing and planned products. However, its businesses are not materially dependent on any one patent, any group of related patents, any one license or any group of related licenses.

To enhance its responsiveness to changing market conditions, it has undertaken a strategic transformation process designed to create long-term flexibility to invest in future growth. It is currently implementing changes that stemmed from the diagnostic phase of this project and is analyzing a wide range of opportunities for process and operational improvements in areas such as global customer interactions and product development processes.

The majority of its revenue is directly or indirectly subject to regulation and oversight by the USPS and foreign postal authorities. It also depends on a healthy postal sector in the geographic markets where it does business, which could be influenced positively or negatively by legislative or regulatory changes in the United States, the European Union or other countries.

Its profitability and revenue in a particular country could be affected by adverse changes in postal regulations, the business processes and practices of individual posts, the decision of a post to enter into particular markets in direct competition, and the impact of any of these changes on postal competitors that do not use its products or services. An accelerated increase in the acceptance of electronic delivery technologies or other displacement of physical mail could adversely affect its business.

Pitney Bowes Inc. was incorporated in the state of Delaware on April 23, 1920, as the Pitney Bowes Postage Meter Company. Today, Pitney Bowes Inc. is the largest provider of mail processing equipment and integrated mail solutions in the world.

We currently have a Neutral recommendation on PBI.

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